Bhagwati vs Sen: What is the real conflict?

Bhagwati vs Sen: What is the real conflict?

"Amartya Sen claimed countries like Singapore educated people first; this led to growth later. That shows how ignorant he is. If you educate people and there are no economic policies that provide increased jobs, the education wouldn’t suffice for growth and prosperity," says Jagdish Bhagwati, professor of economics and law at Columbia University.

The debate between two eminent Indian economists, Jagdish Bhagwati and Amartya Sen, has thrown up lively discussions as well as acerbic jibes. It has also taken political tones, with sharp reactions from various parties.

Jagdish Bhagwati, professor of economics and law at Columbia University, tells Nayanima Basu he is not anti-redistribution, adding the crucial issue is where the money would come from. If this issue isn’t tackled, the poor would only be harmed, he says.

Bhagwati vs Sen: What is the real conflict?

Critics say your debate with Sen is polarising an issue that shouldn’t be polarised. The debate, they say, is based on outdated notions of growth. Growth could be investment in capital, as well as investment in human resources.

Since when did investment mean it had to be in physical capital? Also, there are some instances in which we can eat our cake and have it, too. Thus, you can spend money on education as consumption, while it also serves as investment. But again, we must not overdo this.

A member of Parliament (MP) had once said, “Are we going to eat GDP?” You emphasise growth. What about redistribution?

The MP sounds so idiotic that maybe he should be fed on a GDP diet! If he cared to understand the arguments at hand, he would know there was no way significant redistribution could have been undertaken with results when there were too few rich and too many poor. We would just have been redistributing poverty, as it were.

So, we had to grow first and then spend money on health, education, etc, for the poor. This is what policy economists call the ‘sequencing problem’. If Mr. Sen contends otherwise, he has no serious argumentation and evidence to support his assertions, even in his latest book with Dreze.

So, the issue is not that I am for growth per se and Sen is for ‘redistribution’. That is just a self-serving canard by the likes of Mr. Sen.

I am for redistribution (spending revenue for the poor), but unlike Mr. Sen, I do not pretend somehow money would materialise by our wishing for it, as in some of our mythological tales!

There lies irresponsibility, not wisdom. And, since it will harm the poor, instead of helping them, as I have argued with and without professor Panagariya, this is an immoral position, rather than the “progressive” position Mr. Sen would have his uncritical readers believe it to be.

Bhagwati vs Sen: What is the real conflict?

That is the sort of wishy-washy thinking that obfuscates the issue. Of course, a limited amount of redistribution can be financed even without growth; but how far could we have gone with it in the 60s and 70s?

At the end, there is no alternative to growth, which will raise the revenues earned, at any given rates, to make it feasible to finance the social expenditures our planners and politicians such as Pandit Nehru always wanted.

Sen also claimed countries such as Singapore educated people first; this led to growth later. That shows how ignorant he is. If you educate people and there are no economic policies that provide increased jobs, the education wouldn’t suffice for growth and prosperity.

Singapore had inherited high literacy, but that helped only because outward orientation in trade led to huge exports, which enabled equipment with embodied technology to be imported.

This equipment’s productivity was exceptionally good because of the high literacy, though it would have been high enough even without literacy. Literacy alone could not have led to results unless it fed into outward orientation.

China didn’t have the same level of literacy. But again, the phenomenal growth rate was due, not to literacy (which was good but not exceptional), but to privatisation of the collective farms and to the exceptional export performance of the Guangdong province.

Bhagwati vs Sen: What is the real conflict?

The whole debate between you and Sen has taken political tones, with many accusing you of batting for Narendra Modi. Sen is obviously bashing Modi.

It is nonsense to say I am batting for Modi, when I have often said I wouldn’t vote for Modi or Rahul Gandhi, assuming they are the eventual candidates of the Bharatiya Janata Party and the United Progressive Alliance (respectively) in the forthcoming elections, unless I see their platforms and unless they are forced by public opinion and the media to hold US-style debates.

If Sen is bashing Modi purely on the basis of his prejudices, that is his privilege. But it also betrays lack of integrity and judgement. I have no doubt the UPA leaders, all of whom I know well, will be astonished by Sen’s declarations.

You said Sen paid only lip service to growth. But his PhD was on stimulating growth.

Who did not build or talk about growth models even then? But can Mr. Sen really maintain he was talking explicitly about growth as an instrument for reducing poverty? Or that he was on the right side with gusto in the discussions on growth-enhancing policies such as trade openness, DFI (direct foreign investment), reduction in the massive proliferation of public enterprises and elimination of innumerable senseless interventions.

Bhagwati vs Sen: What is the real conflict?

The debate also saw personal remarks, which surprised many, as these came from eminent economists.

It is silly to fuss about personal remarks. You cannot discuss policy differences without citing your opponent’s writings. That is not getting personal. It is your safeguard against people who would otherwise claim you are creating a straw man.

If the exchange becomes animated, it is good; it will wake people up! If you want to see a debate descend into personal invective, I recommend you see how British intellectuals dish it out to each other, often hitting below the belt.

Nothing we have had in the debate between me and Mr. Sen qualifies us as being in that tradition.

What do you think of the coming World Trade Organization ministerial in Bali, which aims to push for a deal on trade facilitation, while India wants the deal on food security to go through first?

What is wrong with letting trade facilitation go through? That is good for everyone, including India.